Ducey mulls gambling to help fund teacher raises

Gov. Doug Ducey hopes to fund part of his teacher pay package through a new form of gambling that may be illegal, is opposed by a key backer of the governor – and also could blow up the deal Arizona negotiated nearly two decades ago with Indian tribes.

Documents obtained by Capitol Media Services show the governor hopes to generate $15 million a year by convincing Arizonans to play “keno.” That is a game where individuals choose several numbers and wait to see how many of them match those generated by a computer.

The idea is to increase the amount of money people spend with the Arizona Lottery by creating a new game, one with more immediate financial rewards.

But Sen. Sonny Borrelli, R-Lake Havasu City, gave up on a bid earlier this year to actually set up such a game as an attorney for the state’s largest tribe warned lawmakers it would blow up a decades-old agreement.

Steven Hart told members of the Senate Government Committee that the 2002 compacts between tribes and the state give them the exclusive right to operate casino-style games. In exchange, he said the tribes share about $100 million a year in profits.

But Hart, who represents the Navajo Nation, said all that is contingent on the state not expanding into areas now strictly limited to reservations. And he said any plan to have the state operate keno games — perhaps multiple times an hour — violates that deal.

The keno provision is just a small part of how Ducey thinks he can find an extra $270 million for this coming year — and more than $670 million three years from now — to finance his plan to increase base teacher pay by 19 percent above current levels. On top of that, Ducey has promised to restore $371 million that is now being withheld from schools for certain capital purchases.

Much of the plan is based on the governor’s projections of strong economic growth. He also believes an improving economy will cut costs for state health care and social programs.

Ducey also plans to tap other funds and jettison some of both his own priorities and those of lawmakers.

But it is the keno issue that could prove most controversial.

The Arizona Lottery already operates a host of games. That includes lotto-style games like PowerBall, “scratcher” tickets and a new set of instant games where a computer prints out tickets in a way that customers will know immediately if they’ve won anything.

Keno is similar to the lotto games — but with a twist: Multiple games per day, and potentially per hour.

Scarpinato said it will be modeled after what’s already occurring in Connecticut.

There, players get a slip and choose how many numbers they want to play, between one and 10, and then choose those numbers between one and 80. Then they decide how much to wager on each game, up to $20, with the ability to wager on up to 20 consecutive games.

What makes this different from a game like PowerBall is that the drawings are held every four minutes.

But here’s the thing: Existing Arizona law already bans “monitor games” from being conducted or displaying results more than once an hour. Borrelli, seeking to remove legal hurdles, asked colleagues — unsuccessfully — to eliminate that restriction.

Then there’s the separate question of those gaming compacts.

Hart, who was in charge of the Lottery when those deals were being negotiated, said certain kinds of gaming are reserved for the tribes. That specifically includes electronic games.

Less clear, he said, is whether the state could operate keno, with virtually instantaneous games and winnings, without running afoul of the agreement with tribes.

Hart said some of that may have to do with how customers place their bets. He said using paper tickets, versus an interactive terminal, may fall within the exception of what kinds of games the state can operate.

But the devil, he said, is in the details.

“I want to see the legislation,” he said, legislation that Ducey’s office has not yet crafted.

Mike Liburdi, the governor’s chief counsel, said he does not read the tribal gaming compacts as prohibiting the kind of keno games his boss wants to operate. He said there are sufficient exceptions in that language.

As to that once-an-hour limit on games and displaying results, Liburdi said he will have to study that further.

The governor’s problems with the plan would not end, even if the prohibition against games more than once an hour does not apply or can be altered, and even if the tribes do not contest the state operating keno games. Any plan for this kind of expansion will get political opposition from the Center for Arizona Policy.

“Keno is a fast-paced game,” said Cathi Herrod, the organization’s president who has been a key Ducey ally. “It is predatory gambling.”

Herrod said what’s happened in other states is that keno tickets are sold in “family-type restaurants” and sports bars, making the idea of multiple-per-hour drawings particularly addictive.

“We don’t need keno in our state,” she said. And Herrod said she has “made our opposition known” to the governor.

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